In our previous bulletins Federal Government Announces Joint Initiative with Provinces and Territories to Implement Canada Emergency Commercial Rent Assistance Program (the "CECRA"), and CMHC Releases Additional Information on CECRA, we discussed the preliminary details of the CECRA and the program administration by the Canada Mortgage and Housing Corporation (the "CMHC").
On Friday, July 31, 2020, the CMHC released the following updates with respect to the CECRA:
1. New Extension of Rent Relief for Small Businesses: The CECRA program will be extended by one month in order to help small businesses pay rent for August.
2. Eligibility: Eligible small business tenants that qualified for the CECRA based on existing program measures will be able to apply for the additional one month if they had a 70% revenue decline for the months of April, May and June. Businesses will not have to reassess whether they continue to have a 70% revenue decline in July or August in order to be eligible.
3. Eligible Small Business Tenants: Eligible small business tenants are businesses that are:
- Paying less than $50,000 per month in gross rent in a given location, with annual revenues of less than $20 million (at the ultimate parent level); and
- Who have experienced at least a 70% drop in pre-COVID-19 revenues on average for April, May and June.
4. Calculation of 70% Revenue Reduction:
- Small Business Tenant: The gross revenue must consist of revenue earned from ordinary activities in Canada, using the small business tenant's normal accounting method and excluding gross revenues from extraordinary items.
- Registered charities and non-profit organizations: The gross revenue calculation would include most forms of revenue, excluding revenues from non-arm's length persons. These organizations may choose to include revenue from government sources as part of the calculation.
5. Voluntary Participation: Participation in the one-month extension is voluntary. Both existing applicants to the CECRA and new applicants are able to opt for the August rent reduction.
6. Application Deadlines:
- Existing Applicants Must Reapply for the Extension: Existing applicants are required to reapply for the month of August. The deadline to reapply is September 14, 2020.
- New Applicants May Apply for the Entire Period: New applicants have the option of applying for the three-month initial period, four months, or five months, but need to do so by the original date of August 31, 2020.
7. Forgivable Loan Structure Covers Up To Five Months: The forgivable loans provided by the CECRA cover 50% of three to five monthly rent payments that are payable by eligible small business tenants during April, May, June, July and August.
Please contact our Real Estate team for any questions you may have regarding the CECRA.